Did Hwa Hong Corporation Limited's (SGX:H19) Recent Earnings Growth Beat The Trend?
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When Hwa Hong Corporation Limited (SGX:H19) announced its most recent earnings (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Hwa Hong has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see H19 has performed.
View our latest analysis for Hwa Hong
Did H19's recent earnings growth beat the long-term trend and the industry?
H19's trailing twelve-month earnings (from 31 March 2019) of S$5.7m has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -16%, indicating the rate at which H19 is growing has accelerated. How has it been able to do this? Let's take a look at if it is merely attributable to industry tailwinds, or if Hwa Hong has experienced some company-specific growth.
In terms of returns from investment, Hwa Hong has fallen short of achieving a 20% return on equity (ROE), recording 3.0% instead. Furthermore, its return on assets (ROA) of 2.5% is below the SG Real Estate industry of 3.7%, indicating Hwa Hong's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Hwa Hong’s debt level, has declined over the past 3 years from 1.1% to 0.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 14% to 42% over the past 5 years.
What does this mean?
Hwa Hong's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be variables that are influencing the entire industry thus the high industry growth rate over the same period of time. I suggest you continue to research Hwa Hong to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for H19’s future growth? Take a look at our free research report of analyst consensus for H19’s outlook.
Financial Health: Are H19’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
